We now live in a fast-paced life.
We want things asap. Gone are the days when we waited long for our wants and needs before having them.
Today’s mantra is: the faster, the better. Time has become very precious and waiting is considered a waste of it.
We want things instantly that’s why we now have instant noodles, fastfood, instant messaging, instant loans, instant money, and instant riches.
In short, we’re surrounded with things that provide us instant gratification. We want that gadget, that car, that return on investment, and that results right away.
Yet, one of the major lessons in personal finance is to patiently stay on course and build up resources which takes time.
Time is valuable in personal finance. It’s even incorporated in formulas for determining value of money. Given money, you can determine at prevailing interest rate its value after a specified time. It’s aptly called the Time Value of Money. It goes to show that time is really gold or money.
We continually look for ways to lessen expenditures to save money for future use. In a world of instant gratification, disciplining ourselves against impulsive buying is one of the biggest marshmallow tests out there.
Everywhere you look, promos, deals, and gadgets get our attention. You see them in malls, internet, TV, newspapers, huge billboards and on radio. The temptation is almost omnipresent and the urge more than compelling. They act as potholes and bumps on the road if they don’t serve our financial goals.
Often, the most effective weapon against them is a huge financial emotional quotient: controlling your gratification. We delay present satisfaction for future goal. The money saved, when properly managed, can bring more than the stuff put off.
Here are four practical tips to delay gratification and curb buying urge:
1) Remember the bigger picture. Life is not only lived in the present but in the future as well. We’re not only referring to your life but those of your loved ones–the people who depend on you–as well. Always remember your dream—for yourself and for them—is the very reason you’re handling your finances wisely. Are you saving up for your business capital? Your dream retirement? Your children’s education? Then ask yourself if your purchase of the latest gadget or outfit is helping you reach these goals. Whatever your answer is, the bigger picture shall lead you back to the reason why you’re disciplining your expenses. Personal finance is a marathon, not a sprint. Rome wasn’t built in a day.
2) Set a budget. Setting-up a budget means partitioning your income into different purposes: living expenses, discretionary expenses, investments and savings. I suggest you do this on a monthly basis which can be further enhanced by doing it on a daily basis. Hereon, you’ll know how much you can spend for that day only, and thus control your urge to buy anything out of the planned budget. Should you want to allocate a monthly budget for your “impulsive buys”, then do so and stick to it.
Moreover, you may have to forego some “comforts” you aspire. You may forego for the meantime buying a brand new car, or going into fancy vacations, or settle for renting first. Sacrifice a bit so the amount saved can be revolved into investing on your start-up business. Remember that Warren Buffet, one of the world’s richest man, still continues to live in his house he bought in 1958 and isn’t into having the latest car.
3) Set a time when to buy. Of course it’s sale period and the items are really a bargain. You’d love to buy your loved one a gift and this would be a perfect time to buy it cheaper. Yes, you can keep on buying items for future occasions such as birthdays or Christmas. But make sure these items have been planned way before. Other than the time you have set to buy clothes or gadgets, set aside the money for things you’re saving for. Remember, the more you save, the more you get closer to achieving your dreams.
4) Ask yourself if it’s needed. Almost always, the items we buy out of impulse are things we really don’t need.
Let’s face it. The latest gadget? That shoe? The “discounted vacation”? I have worked in a bank, and the big clients I worked with—those people who, through hardwork and sheer frugality has achieved their present success—didn’t buy much of these things while on their way up. They knew what they wanted. For them, the little comforts along the way are distractions to their true goals. The latest gadget right now that costs P40,000 is more than enough to pay for an insurance policy to protect your family, or a condominium unit downpayment, or a semester’s worth of tuition fee for elementary students.
Rienzie P. Biolena is a Registered Financial Planner of RFP Philippines. He’s president and chief financial planner of WealthArki and Consultancy, a financial planning firm. Learn more about personal financial planning at the 72nd RFP program in October 2018. To inquire, e-mail firstname.lastname@example.org or text <name><e-mail><RFP> to 0917-9689774.
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